Any negotiations over debt relief between Greece and the Troika can no longer focus on the primary surplus. There is clearly a sharp contraction under way, amplified by a decline in funding for Greek banks. Whatever primary surplus there was has surely disappeared right now. And how the current events will play out into future values of that surplus - even on unchanged policies - is highly uncertain. Bargains over Greek policy can't be expresed in terms of a fuzzy forecast future primary surplus that some civil servant economist somewhere thinks those policies will generate.
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RIP the primary surplus
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Any negotiations over debt relief between Greece and the Troika can no longer focus on the primary surplus. There is clearly a sharp contraction under way, amplified by a decline in funding for Greek banks. Whatever primary surplus there was has surely disappeared right now. And how the current events will play out into future values of that surplus - even on unchanged policies - is highly uncertain. Bargains over Greek policy can't be expresed in terms of a fuzzy forecast future primary surplus that some civil servant economist somewhere thinks those policies will generate.